agri_investor

AgriInvestor.com

8 Sept 2016

Sustainable Land Management Partners is offering some of its cattle lands for sale to take advantage of strong pricing, according to a member of its management team.

The firm is selling its Quilpie Aggregation, a 16,592-hectare beef cattle property with cropping and light timberlands. It includes a 10-year government carbon abatement contract and is part of the 480,000 hectares held by the Australia Livestock Fund. Although the firm declined to disclose the asking sale price for the property, it did say that the carbon abatement contract had at least doubled the value of the land.

“It is an example of a forest regeneration project getting paid real money for delivering Kyoto-compliant carbon credits,” said the SLM Partners manager.

The livestock fund investment still has six to eight years until it is wound up, so SLM Partners will re-direct any money earned from the sale back into the fund portfolio, possibly on improvements or the purchase of new land, according to the source.

With European institutional investors including PKA, it has acquired 15 properties in Queensland and New South Wales since 2012. All properties have had stockwater improvements, fencing installed and new livestock handling facilities to implement a mob-grazing strategy.

The strategy, thought to be more environmentally friendly than normal grazing methods, involves putting cattle in large herds and moving them frequently across a property, according to SLM Partners’ website.

Colliers International, which is handling the sale, said that the carbon abatement could earn investors A$12 million over its 10 year term. A herd is not being sold with the property, which could be used for conventional or organic production.

Quilpie would particularly suit passive investors, according to Colliers salesman Trenton Hindman.

In 2014, the Australian government committed A$2.55 billion to its Emissions Reduction Fund to buy Australian Carbon Credit Units with farmers and foresters forming part of that market, as part of its attempts to meet its Kyoto Protocol targets.

SLM successfuly bid to supply more than 1.4 million tonnes of carbon dioxide abatement over the next 10 years from the Quilpie Aggregation. The contracted carbon credits cover less than half of the expected carbon sequestration over the next 25 years, according to the manager. “Therefore, there may be opportunities to generate additional credits down the line.”

“We believe this is consistent with sustainable cattle grazing. The property can earn substantial revenues from carbon while still being used for commercial livestock operations,” the source said, adding that some carbon specialists were already looking at the property.

The firm used protecting Mulga trees and controlled grazing pressure to qualify for the contract.

SLM Partners specialises in converting rural land, and is fundraising to invest in grazing properties in Chile. This year its Irish sustainable forestry fund raised €12.5 million from the European Investment Bank, as well as securing three further commitments. It is on the hunt for a fifth investor before it holds a first close later this year. SLM Partners’ investors include institutions, family offices and high-net-worth individuals.